Short interest counts the shares that have been borrowed and sold by investors expecting to buy them back cheaper, expressed as a percentage of the company’s float — the shares actually available to trade, which excludes blocks held by founders, states and insiders. A short interest of 4% means one share in twenty-five of the tradable register is held by somebody who profits if the price falls.
It is the only widely published measure of a negative opinion. Anyone can decline to buy a share; short sellers have to borrow stock, pay a fee for as long as they hold the position and accept unlimited losses if they are wrong, so a large short position is an expensive, maintained conviction rather than a passing view.
Days to cover — also called the short interest ratio — says how many days of normal trading it would take the shorts to buy their positions back. It is the better measure of how crowded a position is, because a 10% short interest in a heavily traded share is easier to exit than 4% in a thin one.
A company with a float of 200m shares, of which 16m are sold short, trading an average of 4m shares a day:
If daily volume were 800,000 instead, the same 8% would take twenty days to unwind. That is the crowded version of the identical headline number, and the one where any piece of good news forces buying into a market with nobody selling — the mechanism behind a short squeeze.
Treat a high reading as a question, not an answer. Somebody has done work and concluded this business is worth less than it costs; the useful response is to find out what they think they have seen — accounting, a debt maturity, a product cycle — and decide whether you agree.
Watch the change more than the level. A short position building steadily over months is a thesis being accumulated; one being closed is a thesis being abandoned, and both move before most public commentary does.
Do not read it as a trading signal in either direction. Shares can stay heavily shorted for years, and a squeeze moves a price without changing anything about the business.
In the app, short interest is one of the twenty-one key metrics on a company page, in the Balance & risk column.
It matters most on companies where the bull case rests on a story rather than on current earnings, on heavily indebted businesses, and on anything where the accounts are complex enough that a dedicated sceptic might genuinely know more than the market. It also matters for position sizing in a small, thinly traded company, where a crowded short can make the price move far more violently than the news warrants.
The data is published on a lag — typically reported twice a month and released days later — so it describes a position that may already have been closed. Not every short is a bet against the company: a large share of the total is hedging, index arbitrage or one leg of a convertible-bond trade, and those positions have no opinion at all. Short sellers are also frequently and expensively wrong, and the crowding that makes a high reading look dramatic is the same crowding that can send the price up rather than down.